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Executive summary │ Middle East 2025 outlook
Themes shaping the outlook in 2025
Balancing geopolitics and the compelling story
The Middle East's global outlier status remains resolute
Four themes shaping the 2025 outlook
We contextualise the Middle East outlook for 2025 in a comprehensive new presentation.
Fat tail risks exist during the fog of war, with prospects that the geopolitics could erupt into a regional confrontation with global reverberations, not insignificant – miscalculations abound. Promisingly, the region’s pragmatism in delicately balancing conflicts with its laser focus on the inward-looking economic diversification strategies remains resolute (and credit positive). We hold conviction that the region’s giga-scale transformation is still in the early innings.
Juxtaposed against today’s geopolitical uncertainty is the Middle East’s global outlier status:
- Short-term and cyclical. Growth remains well-anchored by rapid diversification agendas, with debt low, public finances strong, balance of payments robust, balance sheets unrivalled, creditworthiness resilient and access to debt capital markets is comfortable.
- Medium-term and structural. Today’s pace of renewable energy investments is “too slow” for net zero, and concurrently investments in fossil fuels is “too low” to make up the shortfall. This underinvestment warrants a higher hydrocarbon pricing regime, which continues to fortify the firepower of the region’s sovereign wealth funds (SWFs).
- Long-term and transformational. Game changing shifts in the modus operandi by altering the functioning of financial, labour and legal landscapes is yielding tangible returns – a testament of the seriousness that regional leaderships are turning aspiration into action.
We contextualise what are set to key themes shaping the Middle East outlook into 2025:
- APAC – Middle East synergies. Beyond energy – trade, investments and human capital.
- Saudi Arabia’s “rightsizing” of project spending. Scale backs supports ease overheating.
- Lower Fed rates and the USD pegs. Negative gearing banks to lower rates to outperform.
- Burgeoning role of SWFs. Central in supporting vision strategies – ample bankability.
